Investors have high expectations of startup founders pitching for their cash, and given the number of pitch decks they are reviewing, they have little tolerance for those that fail to hit the mark, with pet peeves that range from a reliance on buzzwords to a lack of exit strategy. It’s important for entrepreneurs to be aware of these potential pitfalls, and to help them, five VCs share their top pitching gripes.
Less is more
Founders often think a deck must communicate every single aspect of their business. The reality is it’s a sales document that needs to communicate just enough to leave an investor wanting to know more. In over 70% of the pitch decks that Andrew J Scott, founding partner of 7percent Ventures sees, he advises the founder to cut 70% of the words.
He says: “Some people say that decks are no longer de rigueur, but it remains the standard way to sell your vision. A poorly articulated or verbose deck often reflects a lack of clarity and focus in the CEO’s mind about how they’re going to build the business.”
Avoid using buzzwords
VCs are reviewing hundreds of pitch decks every month. Founders should resist the temptation to rely on buzzwords, like ‘metaverse company’ to articulate what their business is doing and make it stand out.
“It’s a massive turn off,” says Ariel Rahamim, associate at RLC Ventures. Another, he says, is the insistence of some founders on going through their deck during the intro call. “Send it in ahead of the call,” he adds. “We want to be engaged by your passion and expertise in the field, not by something that can be read later on.”
Do your market research
A major source of frustration for many VCs is a lack of research by the founder on the status quo and market opportunity; data that should be laid out and emphasized within any pitch deck.
Kevin Chong, cohead of Outward VC says: “I’m far less interested in a startup’s board of advisors than I am in whether there’s a real gap in the market, or why a new category is needed. If a pitch deck lacks this kind of insight it means the founders either haven’t done their homework or they have something to hide.”
Not only is research crucial to convincing investors to come on board, it’s also a massive opportunity cost for founders. “It’s a shame when a founder sacrifices years of their life only to find it wasn’t the right market,” adds Chong.
Don’t inflate your valuation
An inflated valuation, in the long term, is worse for both startup and investor and might even destroy value and innovation if the inflation cycle continues, as Alexa Balkova, partner and head of portfolio at Startup Wise Guys explains. “At some point,” she says, “Future investors will assess performance very closely, and without the right fundamentals in place, will decide not to invest, or force founders to do down rounds that are harmful to the companies.”
Focus on one business idea
There’s nothing wrong with developing several business ideas initially, but by the time you start pitching it to investors, you have to be committed to the one you are planning to work on. “One of the things that scares investors quickly is lack of focus,” says Sergey Gribov, partner at Flint Capital VC.
If you have several projects to pitch, his advice is to notify the investor in advance, or set different meetings but don’t try to play tricks while you’re pitching. “I recall one startup that we had invested in that wasn’t showing good performance,” says Gribov. “The founder came to us after some time and pitched a new business project offering a business share for free; an example of good pitching of different projects.”
‘My business is a hotcake -why should I choose you as an investor?’
Asking investors about what value they can bring to your business is hardly a peeve; it’s actually a reasonable question, says Gribov. He would go even further and ask other founders for references on the investor. But, he adds, don’t try to manipulate the investors’ decision by letting them know you have dozens of other VC funds and angels lining up to give you their money. “Be professional and respectful; nobody likes show-offs,” he says.